Name and describe two forms of market failure. Give an example of each.
What will be an ideal response?
Two forms of market failure are externalities and monopolies. An externality causes market failure by pushing the costs or benefits of a product onto those who are not producing or consuming the good. For example, pollution might cause people who live near a factory to become ill and thus suffer some of the costs of that problem. A monopoly causes market failure when a single seller dominates the market and keeps others from participating in mutually beneficial exchange. Monopolies are able to keep prices artificially high because of the lack of competition, so some consumers will be unable to afford to purchase the product or service.
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An increase in the productivity of producing jeans results in
A) the quantity of jeans supplied increasing. B) the supply of jeans increasing. C) buyers demanding more jeans because they are now more efficiently produced. D) buyers demanding fewer jeans because their price will fall, which signals lower quality. E) some change, but the impact on the supply of jeans is impossible to predict.
Charging different prices to different customers for the same good or service is known as
a. monopoly b. price setting c. competition d. price discrimination e. rent seeking
Where would you find a voluntary muscle?
A. Attached to the femur B. In blood vessel walls C. Inside the heart D. Lining the stomach
Aggregate demand is calculated by which of the following equations?
a. C + I + G + (X + M) b. C + I + G + (X – M) c. C + M + X + (G – I) d. C + X + M + (I – G)